Clones Attack! Beware of Fake Binary Options Brokers
One source of competition, and trendy new scam traders should be aware of, is the clone broker. Clones are websites and brokers that chose to ride the coattails of other, more legitimate brokerages by copying their names, their logos, their look and even their URLs. FXStreet is only one name to fall prey to this. According to a press release from the company a binary brand called FXStreetOption.com is offering binary options and implying an association with the FXStreet. FXStreet has denied all connection to the broker and is seeking help in exposing and marking it as a scam for all traders. In the release they explain that the broker is not returning deposits and is a built on a SpotOption white label…which raises the question is SpotOption responsible for this? While the answer to that is unclear SpotOption and other white label platform providers certainly make it easy for scammers to open up a new brand whenever they want.
A Clone By A Different Name…Or Address
The trend of cloning does not stop with merely assuming a name or URL that mimics an existing broker. Fraudulent websites are using false statements and addresses to imply that they are located in a regulated country, and are de facto regulated. Cyprus and CySEC are one such place being abused, with warning issued from there, now Gibraltar is getting on board. The Gibraltar FSC has issued a warning that some claims of Gibraltar locale are false, and that the brokers who actually do reside in the country are not regulated by it. The Gibraltar FSC, which protects traders through its Investor Compensation Scheme, does not regulate binary options and those traders seeking recourse through the FSC have no means of satisfaction.
Competition Heats Up – PowerOption by Ava Shuts Down
Competition among brokers is heating up. As the industry matures and regulations fall into place the need to distinguish themselves as top operators increases. The intense competition for market share has taken its toll on at least one broker and has opened a new avenue for fraudulent activity. The most notable name to fall under this pressure is PowerOption. PowerOption is, or I should say was, the binary options brand of popular forex broker Avatrade. PowerOption was unexpectedly shut down last fall and sources say it was due to a lack of focus resulting in poor client acquisition. Avatrade has been criticized in the past for its handling of the broker; AvaTrade chose to focus more on its forex and CFD business and chose to keep the binary brand completely separate. Perhaps if the execs had chosen to promote PowerOption in a different way it would still be here today.
European Regulators Stand Tall Against Unregulated Brokers
This problem is not as new as it may seem, shady brokers have been around since the industry was founded. Two countries, France and Belgium, have been at the forefront of the fight against unregulated and fraudulent brokers from the very beginning. Both countries maintain an extensive list of brokers who are not licensed to operate in their countries and add to them regularly. The countries are also working together to root out clone brokers who are aggressively targeting their citizens. Frances list alone contains more than 150 names with at least that many on the Belgian warning list. Reading the list highlights another problem though. You will find dozens and dozens of names of shady brokers, unknown brokers and obvious clones… but you will also find the names of trusted brokers who are not CySEC regulated. The problem; a lack of global regulation and conformity in the industry. Because regulation is so spotty, and the status of binary options varies from country to country, a top rated broker in one country may be at the top of a scam list in another. The take away is that no matter what traders are responsible for doing their due diligence in choosing a broker.